Research and Development Tax Credits

R&D Tax Credit Advisers Manchester

Research and Development Tax Credits. What Are They? Can My Business Claim?

Research and development tax credits are a valuable form of government tax relief that helps UK businesses succeed.

R&D Tax Credits reward companies that are involved in any projects that are seeking an advance using any technologies and scientific principles providing that the advance hasn’t been done before in the same way.

  • You can claim back up to £33,350.00 for every £100,000.00 invested in qualifying projects.
  • If you’re developing or enhancing any materials, devices, systems, processes, products or services you might qualify.
  • You can claim back for the money invested in failed/shelved projects as well as successful projects too.
  • R&D Tax Credits often provide a valuable cash injection to most businesses.
  • You can use this form of tax relief in combination with, or in replacement of other forms of business funding.
  • The government rewards UK limited companies attempting to secure an advance in science and industry.
  • The R&D tax incentive is extremely lucrative for UK businesses and can either provide an immediate cash rebate or and/or a substantial reduction in your future tax liability.

To read 'R&D Tax Credits Explained,' please click here

Research and Development Definition

Research and development (R&D) refers to the investigative activities a business conducts to improve existing or to lead to the development of new products, processes, systems, procedures, materials and or services.

So How do Research and Development Tax Credits work?

The principal requirement for R&D Tax Credits to apply is that your business is undertaking projects that are trying to advance science and or industry and that the solutions aren’t immediately obvious to a competent professional.

Providing that you have satisfied the above conditions then you may be eligible to claim. Contact our experts now to quickly establish if you have a claim. Call 0161 791 1401 and one of our team will be happy to help you.

Around 95% of companies who are eligible to claim haven’t, and that is due to a large amount of uncertainty regarding what projects do and don’t qualify.

When your business is attempting to enhance specific areas of your business and industry where the outcomes are uncertain, then again there is a good chance you could claim. Call our specialists to find out how much your claim could be worth.

Our experts will quickly identify if you are eligible for a claim and help you streamline the recovery of your money. If we fail to identify a claim then there is no charge, in other words, we work on a no win no fee basis.

It is important to mention that your business can only claim back up to two open tax years retrospectively and sadly the government caps anything beyond this threshold.

For this reason, if your year-end is approaching and you feel you may have some projects that could qualify it is important to call our specialists straight away so that you don’t lose any of your entitlement.

Our specialist team of R&D Tax Advisors will quickly help to identify all of your qualifying entitlement and will then help boil this information down into a succinct, yet detailed report that will be presented to central government as part of your claim.

Research and Development tax credits exist to help UK businesses succeed. They stimulate companies to consider and undertake projects that could lead to advancements in their field providing a vital competitive advantage.

Now consider this. It could be that your company develops a ground-breaking invention that reinforces the UK’s position globally as a world leader. We have a long track record of producing innovations that shape tomorrow’s world and R&D Tax Credits are a firm indication that the UK government want this tradition to continue.

So why do the government provide such generous tax relief?

Well that’s easy. For every pound the government gives back to an employer, they reason they recoup six-pound back as a consequence.

Why is that; we hear you say?

Well, when you receive a lump sum as a business, the chances are you will reinvest this in your business. You might buy new machinery that is subject to tax. You will pay more wages, again subject to tax and national insurance contributions. Then, these wages are spent on goods that carry duty, cigarettes, alcohol, petrol etc.

The government wins when your business does and it is true to say that R&D tax credits are currently the most lucrative form of tax relief available to UK businesses.

Why Is This Type of Tax Relief Scheme the Most Attractive for Uk Business?

Well, the British government will provide businesses an additional 130% accelerated relief for every one pound of qualifying relief identified. Now the incentive changes slightly depending on whether your business is in profit or operating at a loss but either way, the incentives are extremely valuable and should not be overlooked.

If your business is in profit, you would recover £26,000.00 for every £100,000.00 qualifying expenditure identified.

If your business is operating at a loss, then you will receive £33,350.00 as an immediate tax rebate in as little as six weeks for every £100,000.00 qualifying expenditure identified.

How Can We Make Sure Our Company Qualifies?

So What Company Spend Qualifies for Research and Development Tax Relief?

The governments’ guidelines on what spend qualifies are broad. Let’s not forget this type of tax relief was introduced to help businesses succeed.

The government wins when your company does.

As already mentioned, the main requirements for a claim to succeed are that your business is seeking an advance in science and/or industry.

  • Researching and developing new processes, products, systems, materials, prototypes (even if the project failed)
  • Enhancing, refining, tweaking, modifying and customising any products, services, processes (even if the project failed)

Most forward thinking business owners are looking for ways to continually improve and develop their company.

It is true that you could claim R&D if your business is seeking an advance and that the outcome isn’t immediately obvious to a competent industry professional.

Thankfully, the government understand that Rome wasn’t built in a day, and therefor they understand that the road to success isn’t always smooth.

For that reason, the government will provide this type of tax relief on failed and/or shelved projects too.

So What Exactly Can Our Company Claim For?

Our team will identify all areas of qualifying expenditure and then distil the information into a report to strengthen your claim.

Qualifying company expenditure that can be recovered can include:

  • Shelved/Failed Projects
  • Up to 65% of the expenditure on sub-contractor costs
  • Up to 100% of peoples wages, National Insurance contributions, bonuses and pensions contributions.
  • Expenditure on any software used in the qualifying project.
  • Expenditure on consumables including electrics and lighting, gas all the way through to raw materials and anything else that forms part of the project.
  • Then add 130% to the qualifying pot of expenditure.

Our team of specialists will help you quickly cut to the chase when it comes to identifying qualifying projects and expenditure.

All UK limited companies that are seeking advances may have a claim that can be recovered. Due to the many grey areas when it comes to recovering your full true legal entitlement, we recommend you contact one of our experts without delay.

We are trusted partners to members of the Institute of Chartered Accountants in England and Wales (ICAEW) and the ACCA.

Our team are extremely skilled when it comes to helping businesses find their true claimable figure.

All too often companies who have claimed an apportionment of their entitlement, but not the full amount.

It is therefore extremely important to contact one of our specialists without delay so you don’t miss-out on any of your entitlement.

Our team has a hundred percent success rate when it comes to helping businesses recover any entitlement they’re owed.

We are specialists at liaising with central government until a claim has reached settlement.

Average claims for UK SME’s are around £50,000.00

Businesses is in profit can recover a tax deduction worth £26,000.00 for every £100,000.00 of qualifying expenditure laid down.

Businesses operating at a loss can claim an immediate cash rebate figure is £33,350.00 for every £100,000.00 of qualifying expenditure spent.

Group structured companies can magnify the return by applying the deductible figure elsewhere throughout the group.

Our role is to help identify the maximum legal entitlement and we will work with your accountant to maximise your return.

How Much Can I Claim Back for R&D?

Estimated R&D Spend per year
Profit Making (As Tax Credit)
Profit Making Calculation
Loss Making (Immediate Rebate)
Loss Making Calculation
£50,000
£13,000.00

£50,000

X 130%

=£65,000.00

X20% Corporation Tax = £13,000.00

£13,000.00 / £50,000.00 = 26%
£16,675.00

£50,000

X 130%

=£65,000.00

£50,000.00 +£65,000.00 Enhanced Relief = £115,000.00

£115,000.00 x 14.5% Surrender the Loss Rate = £16,675.00 CASH REBATE

£16,675.00 / £50,000.00 = 33.35%
£250,000
£65,000.00

£250,000

X 130%

=£325,000.00

X20% Corporation Tax = £65,000.00

£65,000.00 / £250,000.00 = 26%
£83,375.00

£250,000

X 130%

=£575,000.00

£250,000.00 +£325,000.00 Enhanced Relief = £575,000.00

£575,000.00 x 14.5% Surrender the Loss Rate = £83,375.00 CASH REBATE

£500,000
£130,000.00

£500,000

X 130%

=£650,000.00

X20% Corporation Tax = £130,000.00

£130,000.00 / £500,000.00 = 26%
£166,750.00

£500,000

X 130%

=£650,000.00

£500,000.00 +£650,000.00 Enhanced Relief = £1,150,000.00

£115,000.00 x 14.5% Surrender the Loss Rate = £166,750.00 CASH REBATE

£166,750.00 / £500,000.00 = 33.35%
£1,000,000
£260,000.00

£100,000,00.00

X 130%

=£1,300,000.00

X20% Corporation Tax = £260,000.00

£260,000.00 / £1,000,000.00 = 26%
£333,500.00

£1,000,000.00

X 130%

=£2,300,000.00

£1,00,000.00 +£1,300,000.00 Enhanced Relief = £2,300,000.00

£2,300,000.00 x 14.5% Surrender the Loss Rate = £333,350.00 CASH REBATE

£333,500.00 / £1,000,000.00 = 33.35%

What Can Effect a Research and Development Tax Claim

Many things can affect the total amount claimable under current R&D tax laws.

It is important so that you can extract the fullest return for your business that you consult with an R&D expert at the earliest opportunity.

If a project is still running or has been shelved, it might be that through making a small number of small ‘tweaks’ that the overall return for your business could be amplified considerably.

R&D Tax Credits are a lucrative form of tax relief that can help your business succeed. Tax relief and rebates put your business in much better shape.

The points mentioned in the list below might impact your claim but even if they do, the claim would still be worthwhile.

My Business Uses Sub-contractors, Can I Still Claim?

If part of your project is dependent on external skills to help you make an advance with a project, then you can recover up to 65% of your spend.

Many companies are contracted-in to conduct R&D on behalf of another company. If this is the case with your company, then you can still claim under the governments RDEC scheme.

Contact our specialist advisors now who can quickly tell you whether you have a claim or not.

We can give you an appreciation as to what a claim could be worth and also explain how quickly we may be able to help you get it back.

If you would like to find out how much you could be owed call us now on 0161 791 1401.

My Business Has Benefited From Grants and Subsidies, Does This Effect My Claim?

Where a business has benefited from grants and/or subsidies then you may need to apply for R&D under the governments RDEC scheme.

Where grants and subsidies are involved, R&D is paid at 11%.

Every R&D claim needs to be taken on its own merits and for that reason, we recommend contacting one of our specialists now so that they can help you get every penny back.

There are many grey areas when it comes to R&D and our team are best placed to take the pain out of the process and reduce your involvement as much as possible.

Call one of our specialists now on:

0161 791 1401

You Do Know I Have a Business Abroad Too…

Providing you are a UK tax payer you still may be able to make a claim.

As long as your business has sought to advance science/industry and some part of the project was led or developed by the UK arm then it is still possible that you can make a claim.

Call one of our experts now who will help you quickly identify if you are able to make a claim.

We’re a Group Structured Company, Are We Still a Small to Medium Enterprise (SME)?

Several legal definitions must be met to establish if your business is linked to another company. Understanding your true legal status can have a bearing on your claim so for that reason, contact our specialists now guidance on how to maximise your claim.

Your company turnover and the total number of employees, number of assets and other areas are all things that need to be considered when trying to establish if you are an SME.

It might be after all things are considered that your company needs to claim under the Governments RDEC scheme. Even so, a claim for your business would still be substantial so call our specialists now.

To speak to one of our R&D tax credit specialists now, call 0161 791 1401

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